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2021 (3) TMI 1472
Demand and Recovery of GST - HELD THAT:- Issue Notice returnable on 24th March, 2021.
In the meanwhile, there shall be no coercive recovery from the petitioners by the respondents till the next date of hearing.
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2021 (3) TMI 1471
Depreciation u/s 32 - amount paid to SEZ as it had acquired commercial right for the use of the land for the purpose of business of the Assessee - HELD THAT:- We find that this issue was not canvassed by the assessee before the Assessing Officer or the CIT(A) or for that matter at Tribunal and this is being raised as an alternate plea by the assessee. In fact, initially, the assessee had raised two substantial questions of law and the question on which this appeal was admitted was the 2nd question of law. So far as the 1 st question of law was whether the Tribunal was right in law in holding that the upfront amount of Rs.5,96,80,000/- paid to Mahindra World city in consideration for the grant of use of land is not deductible as revenue expenditure under Section 37 of the Act.
This Court, having been satisfied that a issue arises for consideration in the assessee's case, is of the view that the matter should be remanded back to the AO for a decision to be taken on merits. Thus the matter stands remitted to the AO for a decision to be taken on merits and in accordance with law, after taking note of the submissions that the assessee may make before the Assessing Officer.
The said issue was considered at the time of admission and by assigning reasons, the same was rejected and the appeal was admitted only on the aforementioned question of law.
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2021 (3) TMI 1470
Accrual of income in India - Expatriate employees seconded by the assessee to its subsidiary constituted fixed place Permanent Establishment (PE) under Article 5(1) of India Korea DTAA or not - HELD THAT:- We find that the issue covered by the grounds in this appeal is answered in favour of the assessee by Tribunal in earlier assessment years and therefore, in view of the consistent stand taken by the Tribunal in assessee’s own cases for previous assessment years, while respectfully following the decision of Radha Soami Satsang [1991 (11) TMI 2 - SUPREME COURT] to hold there is no business activity that is conducted by the assessee through the expatriate employees, the question of estimated income does not arise.
Thus, we hold the issue in favour of the assessee and direct the assessing officer to delete the addition.
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2021 (3) TMI 1469
Permission to make oral submissions in proceedings under Section 19 of the Competition Act, 2002 - HELD THAT:- Without going into the merits of the matter and without going into the legal issues raised by the respondent in this writ petition, the following directions are issued :
i) The petitioner is permitted to submit his oral submissions through video conferencing through his counsel on 19.03.2021 at 11.00 a.m.
ii) The respondent is directed to pass final orders after considering the oral submissions as well as the documentary evidence placed by the petitioner before the respondent.
Petition disposed off.
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2021 (3) TMI 1468
Violation of principles of natural justice while rejecting the request of the respondent for allowing the benefit of MEIS Scheme - justification of Learned Commissioner (Appeals) remanding the matter to the adjudicating authority - HELD THAT:- The adjudicating authority Vide Letter dated 12.06.2019 informed that amendment in shipping bill in respect of MEIS Scheme is not being allowed. Commissioner (Appeals) is agreed upon and even in the administrative capacity if any decision is taken which is adverse to the assessee the principles of natural justice needs to be followed.
From the order of the Commissioner (Appeals) which is based on the various judgment that if any order is passed against the assessee the principles of natural justice has to be observed therefore we do not see any infirmity in the order of the Commissioner (Appeals). The Commissioner (Appeals) has remanded the matter as an open remand and all the issue are open before the adjudicating authority to decide therefore, there cannot be any grievances by the revenue against such order.
The impugned order is upheld, revenue’s appeal is dismissed.
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2021 (3) TMI 1467
Disqualification of the petitioner as Director under Section 164(2)(a) of the Companies Act, 2013 - failure to submit financial statements or annual returns for three financial years consecutively - challenge to impugned order on the ground that without affording opportunity to the petitioner, the said order has been passed - violation of principles of natural justice - HELD THAT:- The issue raised in this writ petition was considered by the Hon'ble Division Bench of this Court in the case of Meetgelaveetil Kaitheri Muralidharan Versus Union of India & Another [2020 (10) TMI 595 - MADRAS HIGH COURT], where it has been held that 'The publication of the list of disqualified directors by the ROC and the deactivation of the DIN of the Appellants is hereby quashed'.
The case on hand stands on the same footing. In the instant case, also, no notice was given to the petitioner before disqualifying him as Director of M/s. Triton Textiles Private Limited.
The ratio laid down by the Hon'ble Division Bench of this Court applies to the facts of the instant case also - the impugned order dated 26.11.2016 passed by the second respondent disqualifying the petitioner as Director of M/s. Triton Textiles Private Limited under Section 164(2)(a) of the Companies Act, 2013 is hereby set aside - Petition allowed.
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2021 (3) TMI 1466
Legality of granting bail - fabrication in the court record by way of using whitener in Sessions Trial - appellant submitted that while releasing Respondent No. 2 accused on bail, the High Court has not at all considered the seriousness of the charge against the accused and the gravity of the matter - locus to file the present application for cancellation of the bail - HELD THAT:- On considering the impugned judgment and order passed by the High Court, it appears that High Court has not adverted itself to the seriousness of the case and the offences alleged against Respondent no.2 – accused and the gravity of the matter. From the impugned order, it appears that the High Court has released Respondent No. 2 – accused on bail in a routine and casual manner and without adverting to the seriousness of the offence and the gravity of the matter relating to forgery and/or manipulating the court order.
From the impugned judgment and order passed by the High Court, it appears that High Court has only observed that since the innocence and complicity of the accused can be decided only after taking evidence with regard thereto, without commenting anything on merit as to the complicity, involvement and severeness of the offences, the case being triable by the Magistrate and the charge sheet having been filed and the accused is languishing in jail since 22.11.2018, is entitled to be released on bail.
However, the High Court has not at all considered that the accused is charged for the offences under Sections 420, 467, 468, 471, 120B IPC and the maximum punishment for offence under Section 467 IPC is 10 years and fine/imprisonment for life and even for the offence under Section 471 IPC the similar punishment. Apart from that forging and/or manipulating the court record and getting benefit of such forged/manipulated court record is a very serious offence. If the Court record is manipulated and/or forged, it will hamper the administration of justice. Forging/manipulating the Court record and taking the benefit of the same stands on altogether a different footing than forging/manipulating other documents between two individuals - the High Court ought to have been more cautious/serious in granting the bail to a person who is alleged to have forged/manipulated the court record and taken the benefit of such manipulated and forged court record more particularly when he has been chargesheeted having found prima facie case and the charge has been framed.
Whether the appellant has no locus to file the present application for cancellation of the bail? - HELD THAT:- It is required to be noted that in fact, it was the appellant who approached the High Court alleging tampering of court record by the Respondent No. 2 accused and thereafter, the High Court directed the Learned Additional Sessions Judge to submit his comments and thereafter the Learned Additional Sessions Judge submitted its enquiry report and thereafter, the FIR has been lodged - Therefore, it cannot be said that the appellant has no locus to file the present application for cancellation of the bail. Even otherwise in a case like this, where the allegations are of tampering with the court order and for whatever reason the State has not filed the bail application the locus is not that much important and it is insignificant.
The impugned judgment and order passed by the High Court releasing Respondent No. 2 accused on bail is unsustainable and deserves to be quashed and set aside and is accordingly set aside - Appeal allowed.
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2021 (3) TMI 1465
Environmental clearance for construction of the Greenfield International Airport, Bhogapuram, Vishakapatnam - Interpretation of the Communication Requirement under Section 16 of the NGT Act - Applicability of the General Clauses Act regarding computation of time for filing appeals - Approach of the court in considering the application for condonation of delay - “sufficient cause” in terms of Section 16 of the NGT Act.
Interpretation of the communication requirement under Section 16 of the NGT Act - HELD THAT:- Environmental disputes relating to forests, biodiversity, air and water are complicated in nature; resolving and expeditiously disposing of these cases is not possible without a separate special court. Environmental courts or tribunals have been a long-standing demand for other reasons too. For effective prevention and control of environmental protection, there was an urgent need for a separate environmental court or tribunal to adjudicate without much delay. India is a party to the United Nations Conference on the Human Environment (known as the Stockholm Conference), 1972 where it made commitments relating to safeguarding of natural resources and developing international law, and to provide compensation to victims of pollution and other environmental degradation. India is also a signatory to the Rio Declaration adopted at the United Nations Conference on Environment and Development at Rio de Janeiro in 1992. The Rio Declaration states that participating states must make suitable environmental legislation regarding effective access to the people, to judicial and administrative proceedings, including remedies.
The court noted that to be a member of the NGT, the individual had to possess specified academic qualifications, including a master’s degree in science with a doctorate in engineering or technology, with prescribed experience in certain domains. To be an administrative member, the individual should possess fifteen years’ administrative experience including experience of five years in dealing with environmental matters in the Central or State Government or in a reputed national or state level institution. The court proceeded to hold in HANUMAN LAXMAN AROSKAR & FEDERATION OF RAINBOW WARRIORS VERSUS UNION OF INDIA [2019 (3) TMI 2072 - SUPREME COURT], that the grant of environmental clearance to a greenfield airport in Goa did not receive proper merits review by the NGT.
Given the nature of jurisdiction which the NGT has been invested with, the substantial questions of law that arise in the present case, are whether the approach to the issue of limitation by the NGT was correct, and whether on a correct interpretation of law, the appeal under Section 16 was filed within the 90 days period, in the facts of this case.
Applicability of General Clauses Act - HELD THAT:- Section 10 of the General Clauses Act, 1897 stipulates that when the last date for doing something falls on a public holiday, the act “shall be considered as done.” if it “is done or taken on the next day afterwards on which the Court or office is open”. This provision applies to all Central Acts enacted after the said Act was brought into force - It is also noticeable that there is no indication in the NGT Act that Section 10 of the General Clauses Act cannot be applied. It is therefore, held that the provision applies proprio vigore to all appeals filed under the NGT Act.
Approach of the court in considering the application for condonation of delay - “sufficient cause” in terms of Section 16 of the NGT Act - HELD THAT:- While it is unexceptionable for the Project Applicant to argue that the Limitation Act is per se inapplicable to proceedings under the NGT Act, given that the basic, and outer period of limitation for filing an appeal have been enacted, nevertheless, what constitutes sufficient cause, is left to the discretion of the tribunal. Here, the court discerns a surfeit of authority on what the term denotes, and the general approach of the court, in dealing with delay.
It is relevant to consider whether the NGT’s refusal to exercise discretion, in the facts and circumstances of this case, was erroneous. The court is conscious of the fact that exercise of discretion, per se, is a fact dependent one, and considerable latitude should be given to the court or tribunal of the first instance, in the performance of that task. Nevertheless, as decided, cases and judgments have shown that the exercise of discretion does at times, call for appellate scrutiny by this court - this court is of the opinion that given the mandate of the NGT Act, the exercise of discretion, as was done in this case, to reject the appeal by dismissing the application for condonation of delay, on the ground that no sufficient cause was shown, was erroneous and based on a narrow reading of the law. An appeal to the NGT in such matters is no ordinary matter; it has the potential of irrevocably changing the environment with the possibility of likely injury. Application of judicial mind by an independent tribunal in such cases, at the first appellate stage, is almost a necessity.
This court is of the opinion that the impugned order of NGT has to be and is, therefore set aside. The delay in filing the appeal before the NGT is hereby condoned; the parties shall now appear and proceed to argue the appeal on its merit, which shall then be disposed in accordance with law - Appeal allowed.
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2021 (3) TMI 1464
Taking over the possession of flat under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( SARFAESI Act, 2002) - challenge to action of the Magistrate under Section 14 of the SARFAESI Act, 2002 - HELD THAT:- It is by now, well settled that the Magistrate, under Section 14 of the SARFAESI Act, 2002, basically aids and assists the Banks to attach and take possession of secured assets. Section 13 (4) of the SARFAESI Act, 2002, empowers the Banks to take possession of the secured assets without the intervention of the Courts or by seeking the assistance of the Magistrate under Section 14 of the SARFAESI Act, 2002. It is by now, well settled that the Bank, by applying to the Magistrate to take action under Section 14 of the SARFAESI Act, 2002, is taking one of the measures, as contemplated by Section 13 (4) of the SARFAESI Act, 2002. There is also no dispute that as against the measures under Section 13 (4) of the SARFAESI Act, 2002, any person, including the borrower, if aggrieved by any of the measures under Section 13 (4) of the SARFAESI Act, 2002, by the secured creditor, can make an application to the Debt Recovery Tribunal (DRT) within 45 days from the date on which such measures have been taken.
Now that the interim orders were operating since 3rd November 2014, there are no difficulty, in the peculiar circumstances of the present case to extend such interim orders for three months from today. If within this period of three months, the Petitioners do not take out the proceedings before the DRT and secure any interim order therein, the Respondents will be at liberty to proceed with their action under the SARFAESI Act, 2002.
This petition is dismissed but liberty granted to the Petitioners to take out the appropriate proceedings before the DRT. The DRT may take into consideration the fact that this petition was pending in this Court from 3rd November 2014 till date. Further, the interim order granted on 3rd November 2014 extended for three months from today.
Petition dispsoed off.
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2021 (3) TMI 1463
Dishonour of Cheque - main contention of the petitioners is that the complaint is filed against the Directors of the M/s. Café Coffee Day, who are the petitioners herein but M/s. Café Coffee Day is not a juristic person - Power of Attorney Holder can sign and file a complaint petition on behalf of the complainant or not - verification on oath under Section 200 of the Code - whether the complaint is maintainable as against the petitioners herein and the very contention of the learned counsel for the petitioners that complaint is not against a juristic person, is to be accepted or not?
HELD THAT:- On perusal of the complaint, it discloses that the same is filed against M/s Café Coffee Day, represented by its Directors, whereas the word “Global” is missing. In order to substantiate the contention of the respondent, learned counsel also brought to the notice of this Court that Annexure-A notice was issued against a juristic person i.e., M/s. Café Coffee Day Global Limited and the specific averments are made against the representative of the Company i.e., its Directors and Authorized Signatories. It is also important to note that the notice was acknowledged and reply was given by M/s Café Coffee Day, but in the reply, the only dispute raised is with regard to the recipient Nos.5, 7, 8 and 9 stating that they are irrelevant parties. However, recipient No.5 is not a Director and others are not directly connected to M/s. Café Coffee Day Global Limited and they are not aware of recipient No.5.
Having perused the reply notice, it clearly depicts that they made part payment of Rs. 12 lakhs to the complainant and now, only on the ground of technicality, the petitioners cannot contend that a juristic person is not made as a party to the proceedings. Annexure-C discloses that the rejoinder was given to the reply notice at Annexure-B and so also Annexure–D was given to M/s. Coffee Day Global Limited. When such being the facts and circumstances of the case, now the petitioners cannot contend that the complaint is not maintainable - the very contention of the learned counsel for the petitioners that the complaint is not made against a juristic person, cannot be accepted. The defences which have been taken by the petitioners are to be considered only during the course of the trial and not at this stage.
The contentions raised by the petitioners herein cannot be accepted at this stage since it is a matter of trial. The complainant can even array the Company at any stage. Herein, it is a case of issuance of notice against a juristic person and its Directors - it is not a case for quashment of the proceedings on the ground of technicality and the Court has to look into the substantative material available on record and substantative justice has to be done.
There are no merit in the petition to quash the proceedings initiated against the petitioners herein - petition dismissed.
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2021 (3) TMI 1462
Possession of mortgaged property taken forcefully under SARFAESI Act - Non-compliance of DRT order for restoration of possession - HELD THAT:- Even for the purposes of enforcement of an order dated 18.02.2021, where the direction was simultaneously issued by the DRT to the petitioners to deposit Rs. 4.00 lakh and also direction was issued that the possession of one room would be handed over to the petitioner, would fall to be a measure, which is contemplated under sub Section (4) of Section 13 of the SARFAESI Act, 2002, which constitutes to be the part of the actions, which has been taken under sub Section (1) of Section 17 of the SARFAESI Act, 2002.
The petitioners’ remedy for an expeditious disposal and for compliance of the order dated 18.02.2021, since falls to be within the ambit of sub Section (4) of Section 13, which is inclusive under the provisions contained under sub Section (1) of Section 17, the remedy available to the petitioners would be under sub Section (6) of Section 17 of the SARFAESI Act, 2002.
This writ petition is dismissed as not maintainable, with the liberty open to the petitioners to approach the Appellate Forum, as provided to the petitioners under sub Section (6) of Section 17 of the SARFAESI Act, 2002.
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2021 (3) TMI 1461
Dishonour of Cheque - legally enforceable debt or liability or not - failure to draw presumption u/s 139 of NI Act, 1881 - cross-examination of complainant - HELD THAT:- In the cross-examination of the complainant, the defence was that there was no transaction between the complainant and the accused and all the transactions of the complainant were with his brother Mohan Prasad Purohit and in the absence of his brother Mohan Prasad Purohit, the complainant had taken seven cheques from the shop of his brother. With respect to the cheque-in-question, which was dishonoured, the defence was that the said cheque was amongst the seven cheques, which was misused by the complainant.
Under Section 139 of the Act, 1881, once a cheque has been signed and issued in favour of the holder, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability. However, this presumption is a rebuttable one.
In Rangappa vs. Sri Mohan [2010 (5) TMI 391 - SUPREME COURT] the Hon’ble Supreme Court has held that in view of Section 139, it has to be presumed that a cheque is issued in discharge of any debt or other liability. It is for the accused to rebut the said presumption, though accused need not adduce his own evidence and can rely upon the material submitted by the complainant.
There was no case in the reply of the accused that the complainant had taken seven cheques from the shop of his brother and the cheque-in- question was amongst the seven cheques, which was misused by the complainant. The statement of the accused under Section 313 of the Code of Criminal Procedure is not a substantive evidence of defence of the accused but only an opportunity to the accused to explain the incriminating circumstances appearing in the prosecution case. Mere statement of the accused may not be sufficient to rebut the presumption. Therefore, this Court does not see any basis in the contention of the learned counsel for the respondent that the respondent-accused has been successful in creating doubt in the mind of the Court with regard to the existence of the legally enforceable debt or liability.
Section 141 of the Act, 1881 stipulates the liability for the offence punishable under Section 138 of the Act, 1881 when the person committing such an offence happens to be a company i.e. when the drawer of the cheque happens to be a company. For the purpose of Section 141 of the Act, 1881, a firm comes within the ambit of a company.
Thus, it is clear that if the cheque had been issued by the firm which was subsequently dishonoured, a partner of the firm would not be liable for prosecution under Section 138 of the Act, 1881 without the firm being arraigned as an accused. In the present complaint, filed by the appellant-complainant before the learned trial court, the firm is not arraigned as an accused.
The present appeal is devoid of merit. The present appeal is liable to be dismissed, the same is dismissed.
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2021 (3) TMI 1460
Abusing of dominant position in launching their payment app services - contravention of the provisions of Section 4 of Competition Act, 2002 - HELD THAT:- It is noted that Section 4 of the Act proscribes abuse of dominance by an entity commanding dominant position in relevant market. Thus, delineation of relevant market is essential to define the boundaries of the market to ascertain dominance and for analysing the alleged abusive conduct. Recently, the Commission had an occasion to examine the relevant market in the context of business practices of WhatsApp and Facebook in Harshita Chawla case wherein an Information was filed before the Commission alleging inter alia contravention of the provisions of Section 4 of the Act against WhatsApp and Facebook for abusing their dominant position in launching their payment app services.
The Commission concluded that WhatsApp is dominant in the relevant market for OTT messaging apps through smartphones in India. As such, in light of the said holding of the Commission in Harshita Chawla case, there is no occasion to separately and independently examine the issue of relevant market and dominance of WhatsApp therein, when there is no change in the market construct or structure since the passing of the said order in August, 2020 and announcing of the new policy by WhatsApp on January 04, 2021 – which itself seems to emanate out of the entrenched dominant position of WhatsApp in the said relevant market, as detailed in this order.
In VINOD KUMAR GUPTA VERSUS WHATSAPP INC. [2017 (6) TMI 1399 - COMPETITION COMMISSION OF INDIA (LB)], the fact that WhatsApp provided an option to its users to ‘opt out’ of sharing user account information with ‘Facebook’ within 30 days of agreeing to the updated terms of service and privacy policy was a critical consideration in deciding against the alleged contravention by WhatsApp. As against this, the new privacy policy has removed the ‘opt out’ option given to the users and the users have now to mandatorily agree to sharing of their personalised data by WhatsApp with Facebook Companies and further the policy envisages data collection which appears to be unduly expansive and disproportionate.
The Commission is of prima facie opinion that the ‘take-it-or-leave-it’ nature of privacy policy and terms of service of WhatsApp and the information sharing stipulations mentioned therein, merit a detailed investigation in view of the market position and market power enjoyed by WhatsApp. The Commission has also taken note of the submission of WhatsApp that 2021 Update does not expand WhatsApp’s ability to share data with Facebook and the said update intends to provide users with further transparency about how WhatsApp collects, uses and shares data. The veracity of such claims would also be examined during the investigation by the DG.
On a careful and thoughtful consideration of the matter, the conduct of WhatsApp in sharing of users’ personalised data with other Facebook Companies, in a manner that is neither fully transparent nor based on voluntary and specific user consent, appears prima facie unfair to users. The purpose of such sharing appears to be beyond users’ reasonable and legitimate expectations regarding quality, security and other relevant aspects of the service for which they register on WhatsApp - The impugned conduct of data-sharing by WhatsApp with Facebook apparently amounts to degradation of non-price parameters of competition viz. quality which result in objective detriment to consumers, without any acceptable justification. Such conduct prima facie amounts to imposition of unfair terms and conditions upon the users of WhatsApp messaging app, in violation of the provisions of Section 4(2)(a)(i) of the Act.
The impugned data sharing provision may have exclusionary effects also in the display advertising market which has the potential to undermine the competitive process and creates further barriers to market entry besides leveraging, in violation of the provisions of Section 4(2)(c) and (e) of the Act. As per the 2021 update to the privacy policy, a business may give third-party service provider such as Facebook access to its communications to send, store, read, manage, or otherwise process them for the business. It may be possible that Facebook will condition provision of such services to businesses with a requirement for using the data collected by them. The DG may also investigate these aspects during its investigation.
The Commission is of the considered opinion that WhatsApp has prima facie contravened the provisions of Section 4 of the Act through its exploitative and exclusionary conduct, as detailed in this order, in the garb of policy update. A thorough and detailed investigation is required to ascertain the full extent, scope and impact of data sharing through involuntary consent of users - the Commission directs the Director General (DG) to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act. The Commission also directs the DG to complete the investigation and submit the investigation report within a period of 60 days from the receipt of this order.
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2021 (3) TMI 1459
TP Adjustment - treating the enterprises as associated enterprises - Whether the assessee, Ambico UK and Narayan UK are AEs as defined u/s 92A? - HELD THAT:- In the instant case, the DRP has held that the basic conditions laid down in sub-section (1)(b) of section 92A of the Act are satisfied, therefore, there is no need to travel to the provisions of sub-section(2) of section 92A.
DRP further observed that there no requirement under the section to simultaneous satisfy the conditions set out in sub-section (1) & (2). The DRP further went on to remark that drawing such an inference would render the provisions of section 92A(1) otiose.
The observations of the DRP are contrary to the law settled by the Hon’ble Apex Court and various decisions rendered by the Tribunal over the period of time. The Revenue has failed to make out a case that the assessee and the two foreign enterprises fall in any of the deeming provisions enlisted in clause (a) to (m) of sub-section (2) of section 92A of the Act.
No hesitation in holding that the assessee, Ambico UK and Narayan UK do not fall within the definition of AE as defined u/s 92A - Hence, the transactions between the assessee and two foreign entities are outside the realm of TP provisions. We find merit in the contentions of the assessee. The ground No. 1 of the appeal is allowed, accordingly.
Validity of reference to TPO u/s 92CA(1) - Whether proper show cause notice was served to the assessee by the Assessing Officer before making reference to TPO under section 92CA(1)? - Opportunity of hearing is a procedural requirement implicit in section 92CA(1) of the Act. The Hon’ble High Court in the case of Indorama Synthetic (India) Ltd. [2016 (8) TMI 151 - DELHI HIGH COURT] set aside the references made to TPO in the impugned assessment years and referred the issue back to the Assessing Officer for fresh determination after affording opportunity of hearing to the assessee.
The present case undisputedly falls under one of the three situations listed by the CBDT where opportunity of hearing should have been granted by the Assessing Officer before making reference to the TPO. As is evident from records, no show cause notice was ever served on the assessee by the AO before making reference to the TPO. AO only directed the assessee through order sheet entry to file and affidavit of Harshad Danesh Patel.
The reference made to TPO by the Assessing Officer suffers from infirmity. Consequently, the said reference is liable to be set aside. In the present case, since, we have held that the Revenue has not been able to prove that there is an ‘international transaction’ between ‘associated enterprises’, setting aside reference u/s 92CA(1) and restoring the issue to AO for allowing opportunity to the assessee of being heard after issuing notice on making reference would be an exercise in futility. In the light of our decision on ground no.1 of appeal, the ground no.2 of appeal has become academic.
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2021 (3) TMI 1458
Application of section 5 of the Limitation Act is excluded by the scheme of the Commercial Courts Act - judgment in N.V. International v. State of Assam [2019 (12) TMI 1515 - SUPREME COURT] lays down the law correctly or not - HELD THAT:- Firstly, as has correctly been argued by Shri Shroti, N.V. International does not notice the provisions of the Commercial Courts Act at all and can be said to be per incuriam on this count. Secondly, it is also correct to note that the period of 90 days plus 30 days and not thereafter mentioned in section 34(3) of the Arbitration Act cannot now apply, the limitation period for filing of appeals under the Commercial Courts Act being 60 days and not 90 days. Thirdly, the argument that absent a provision curtailing the condonation of delay beyond the period provided in section 13 of the Commercial Courts Act would also make it clear that any such bodily lifting of the last part of section 34(3) into section 37 of the Arbitration Act would also be unwarranted - Shri Navare’s argument cannot be accepted that this is a mere casus omissus which can be filled in by the Court.
The difference between interpretation and legislation is sometimes a fine one, as it has repeatedly been held that judges do not merely interpret the law but also create law.
Reliance upon the judgment of this Court in P. Radha Bai v. P. Ashok Kumar, [2018 (11) TMI 1529 - SUPREME COURT] on the doctrine of unbreakability when applied to section 34(3) of the Arbitration Act, also does not carry the matter much further, as the question is whether this doctrine can be bodily lifted and engrafted onto an appeal provision that has no cut-off point beyond which delay cannot be condoned.
Thus, N.V. International has been wrongly decided and is therefore overruled.
Application of section 5 of the Limitation Act to appeals which are governed by a uniform 60-day period of limitation - HELD THAT:- Reading the Arbitration Act and the Commercial Courts Act as a whole, it is clear that when section 37 of the Arbitration Act is read with either Article 116 or 117 of the Limitation Act or section 13(1A) of the Commercial Courts Act, the object and context provided by the aforesaid statutes, read as a whole, is the speedy disposal of appeals filed under section 37 of the Arbitration Act. To read section 5 of the Limitation Act consistently with the aforesaid object, it is necessary to discover as to what the expression “sufficient cause” means in the context of condoning delay in filing appeals under section 37 of the Arbitration Act.
Given the aforesaid and the object of speedy disposal sought to be achieved both under the Arbitration Act and the Commercial Courts Act, for appeals filed under section 37 of the Arbitration Act that are governed by Articles 116 and 117 of the Limitation Act or section 13(1A) of the Commercial Courts Act, a delay beyond 90 days, 30 days or 60 days, respectively, is to be condoned by way of exception and not by way of rule. In a fit case in which a party has otherwise acted bona fide and not in a negligent manner, a short delay beyond such period can, in the discretion of the court, be condoned, always bearing in mind that the other side of the picture is that the opposite party may have acquired both in equity and justice, what may now be lost by the first party’s inaction, negligence or laches.
There is a long delay of 131 days beyond the 60- day period provided for filing an appeal under section 13(1A) of the Commercial Courts Act. There is no explanation worth the name contained in the condonation of delay application, beyond the usual file-pushing and administrative exigency.
This appeal is therefore dismissed.
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2021 (3) TMI 1457
Validity of reopening of assessment - as submitted notice issued beyond a period of four years - as pointed out that the reasons recorded by the AO pertaining to deduction claimed u/s 80IA( 4) was already considered while passing order under section 143(3) and the reliance placed on subsection (12)(a) of section 80IA also would not be applicable as the case is covered by clause (b) of subsection (12) of section 80IA - HELD THAT:- Considering the above submissions, issue notice returnable on 6th May, 2021.
In the meantime, by way of ad interim relief, it is directed that the respondents shall not pass the final order without the leave of the Court.
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2021 (3) TMI 1456
Addition u/s 40(a)(iib) - non deduction of TDS on guarantee commission paid to Government of Karnataka - HELD THAT:- Guarantee is not exclusively given by the State Government only to the Assessee which is a State Government undertaking but to various Government Departments, Public Sector undertakings, Local Authorities, Statutory Boards and Corporations and Cooperative Institutions etc., and also to for loans granted by the Karnataka State Co-operative Apex Bank Limited and Karnataka State Co-operative Agriculture and Rural Land Development Bank Limited for the purpose of Agriculture and in turn to require them to reduce one percent interest in their lending rate in respect of the agricultural loans disbursed by them. The decision in the case of Kerala State Beverages Corporation Ltd. [2020 (5) TMI 176 - KERALA HIGH COURT] clearly supports the plea of the Assessee that there is no “exclusivity” in terms of charging of “Guarantee Commission”.
We therefore accept the argument of the Assessee that for applying the provisions of Sec. 40(a)(iib) of the Act there should be a levy of “royalty, licence fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called” , which is levied exclusively on State Government undertaking by the State Government. Guarantee commission is not paid directly to the State Government and they are not levies imposed exclusively on the Assessee. The State Government issues Guarantees on behalf of the Government Departments, Public Sector Undertakings, Local Authorities, statutory Boards and Corporations and Co-operative Institutions. Consequently, we hold that the disallowance made u/s.4(a)(iib) of the Act cannot be sustained.
Guarantee Commission is not in the nature of a “levy” on a state Government undertaking by the State Government. It is purely a contractual payment. According to Black's Law Dictionary Fifth Edition, the word "levy" means:- “To assess; raise; execute; exact: tax; collect: gather; take”. To qualify as a “levy” within the meaning of Sec. 40(a)(iib) of the Act, the payment to the State Government by a State Government undertaking should be based on a power on the part of the State Government to impose a levy. It should be a compulsory exaction by the State Government from the State Government Undertaking. Guarantee Commission is paid in consideration for the State Government agreeing to suffer a detriment in the event of the Assessee not repaying the value of the bonds on its maturity. Guarantee Commission does not fall within the ambit of the mischief that was sought to be remedied by the legislature by inserting Sec. 40(a)(iib) of the Act.
We do not wish to deal with the other contention of the Assessee that the Guarantee fee does not fall with the ambit of the expression “royalty, licence fee, service fee, privilege fee, service charge or any other fee or charge, by whatever name called” is not taken up for consideration. Assessee appeal allowed.
Disallowance u/s 14A r.w.r. 8D - quantum of disallowance to be made - plea of the Assessee before CIT(A) that the average value of investments should be computed by taking only those investments which yielded dividend income - HELD THAT:- CIT(A) directed the AO not to consider the sum being investments in shares of Karnataka Neeravari Nigam Limited and Krishna Bhagya Jala Nigam while calculating average value of investments because these investments did not yield any dividend during the previous year. In doing so he followed the decision of the Tribunal [2018 (10) TMI 352 - ITAT BANGALORE] wherein it was held following decision of M/S. REI. AGRO LTD.[2014 (4) TMI 713 - CALCUTTA HIGH COURT] and Special Bench of the Delhi Tribunal in the case of ACIT v. Vireet Investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI] held that only those investments which yielded dividend income are to be considered for computing average value of investments for the purpose of Rule 8D(2) of the Rules.
The grievance of the revenue in the grounds of appeal is that the decision of the Tribunal for AY 2011-12 has not been accepted by the department and an appeal has been filed against the said order. In our view the decision of the Tribunal is applicable to the present AY 2014-15 also as the facts and circumstances are identical. We therefore do not find any grounds to interfere with the order of the CIT(A). Hence, revenue’s appeal is dismissed
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2021 (3) TMI 1455
Disallowance u/s. 14A of the Act r.w. Rule 8D(2)(iii) - assessee made voluntary disallowance of administrative expenses under third limb of Rule 8D(2) of the Rules - as there was no exempt income derived by the assessee, he pleaded that suo-moto addition should be reduced while determining taxable income as there was no exempt income derived by the assessee - HELD THAT:- We find that assessee is entitled to make a claim before the ld. AO or before the ld. CIT(A) even though it had made certain erroneous disallowance in the return of income. Reliance in this regard is placed on the decision of Pruthvi Brokers and Shareholders Pvt Ltd [2012 (7) TMI 158 - BOMBAY HIGH COURT] Respectfully following the said decision, we hold that the lower authorities ought to have entertained the claim of the assessee.
We also find that the ld. CIT(A) had categorically agreed to the legal proposition that no disallowance u/s. 14A of the Act could be made when there is no exempt income. Having said so, he ought to have entertained the plea of the assessee and directed the ld. AO to reduce even the suo moto disallowancemade by the assessee. To this extent, we are inclined to modify the order of the ld. CIT(A) and direct the ld. AO to delete suo moto disallowance made by the assessee.
Assessed income going below returned income - We are conscious of the fact that this deletion of suo moto disallowance would result in assessed income going below the returned income. In this regard, we find that in the case of Gujarat Gas Company Ltd [2000 (4) TMI 19 - GUJARAT HIGH COURT] and also Milton Laminates Ltd [2013 (3) TMI 192 - GUJARAT HIGH COURT] had categorically held that the assessed income could go below the returned income if assessee had disclosed certain income which is not supposed to be disclosed as per law.
Thus we direct the ld. AO to delete the voluntary disallowance made by the assessee u/s. 14A of the Act even if ultimately the assessed income goes below the returned income.
Appeal of the assessee is allowed.
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2021 (3) TMI 1454
Estimation of income - bogus purchases - CIT(A) restricting the disallowance of purchases to 12.5% - HELD THAT:- On a perusal of the order of the CIT(A), we find that the CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order and following various judicial pronouncements restricted the disallowance to 12.5% of the non-genuine purchases.
No infirmity in the order passed by the CIT(A) in restricting the addition/disallowance to the extent of 12.5% of the purchases. Grounds raised by the revenue are dismissed.
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2021 (3) TMI 1453
Withdrawal of appeal - Settlement of dispute under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- It is found that since the case has been settled under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 the appeal lying pending in this tribunal shall be deemed to have been withdrawn in terms of section 127(6) of Chapter V of Finance (No.2) Act, 2019.
The appeal is disposed of as withdrawn.
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